Much bigger drop in commercial building consents than residential building consents

Much bigger drop in commercial building consents than residential building consents

There was an 8.7% decline in the number of new homes consented in March, with some councils experiencing difficulties processing consents after the commencement of the COVID-19 lockdown.

Statistics NZ recorded 2904 new dwelling consents throughout the country in March, down 11.6% compared to the 3285 dwellings consented in February and down 8.7% compared to the 3180 consented in March last year.

The biggest drop was in the number of new retirement village units consented, which dropped to just 104, down 40.2% compared to March last year, followed by 290 apartments (-36.3%), while stand alone houses held up reasonably well with 1722 consented in March which was down just 11.6%.

Townhouses and home units were the bright spot in the figures with 788 consented in March, which was up 30.9% compared to March last year.

There was also a decline in the value of consents for residential alterations and additions, which fell to $152 million in March, down 6.6% compared to March last year.

The total value of all residential consents issued in March was $1.31 billion, down 5.7% compared to March last year.

However, there was a much bigger decline in the value of non-residential building work consented in March.

Statistics NZ said the value of all non-residential building work consented in March was $433 million, down 35.5% compared to March last year.

The biggest declines were hostels/boardinghouses/prisons -98.7%, followed by hospitals and nursing homes -80.9%, educational buildings -69.5%, offices -46.8%, retail premises -44.2%, farm buildings -24.0% and warehouse/storage buildings -5.2%.

However, consents for hotels/motels and factories went against the trend, with hotels/motels up 24.5% compared to March last year and factory consents up 96.2%.

The total value of building work consented in March was $1.775 billion, down 15.1% compared to March last year.

"The drop in new homes consented for March may partly be attributed to the COVID-19 pandemic and subsequent lockdown, and some councils had difficulties issuing consents at the end of March," Statistics NZ acting construction indicators manager Dave Adair said.

Adair said two councils were unable to provide their consent figures in time to be included in the March figures but they accounted for less than 1% of the total.

The March figures would be revised when the April figures are released next month.

The first interactive chart below shows the number of new dwelling consents issued each month in every region.

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Building consents - residential

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Building consents - type

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Building consents - growth

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14 Comments

The April drops will be much larger with design work slowing and slow processing at the local councils. So far a lot of planned projects are now on hold due to uncertainty. I'm waiting for alert level 2 to see what's survived.

A shame there isn't a way to find out how many builds have been cancelled completely, and it is a thing.

Just what I was thinking.
I guess the only way to guess would be keep an eye on sections that start to get listed with the plans and consents included.
From what I have heard from friend it is going to get very bad this winter.
I would be very careful paying in advance now as many building firms may not be around come springtime but history will repeat and many people will get shafted.

Exactly.
It's hard not to think there won't be carnage in some of those far flung developments in places like Milldale and the Charles Ma development in the south.
Where you spend north of 800-900k for a 3 bedroom townhouse on a pocket handkerchief sized section

That market will die.
High end and low end might still do OK.

Down in March - obvious as lockdown started in last week of March.

April will be worse as was under lockdown for entire month.

Real data will be after few months of lockdown.

It's interesting reading Roger Douglas's views. Despite being a neoliberal, he is advocating some of the things I have been advocating, with greater involvement of govt in house building, much more shared equity etc.
And focusing on that rather than questionable infrastructure projects.

Got a link?

We supply the construction trade, 70% by value to commercial. Since opening properly at L3, sales have been manic as housing tradies play catch up. We expect this to begin tailing off by the end of may and be pretty much dead by end of June. But the high level of large infrastructure pricing activity that existed before C19 continues to grow. Govt departments appear to be trying to advance as many projects as possible.

That last bit is reassuring - I see people arguing that an imminent population decline should make certain proposed projects redundant, to which, I say, a lot of our existing infrastructure we heavily rely on was built 30-50 years ago when we had 3-4 million people living in this country.

Also, we might want to live up to our 'advanced' economy status and fix our outdated highways, railways, 3-waters infra, power distribution, public transport, etc.

The infrastructure sector will be fine.
Commercial and residential, not so. Although hopefully the government helps limit the damage with residential by ramping up its programme....

I feel commercial construction may not return to pre-Covid rates of activity if more businesses learn the valuable lessons of trusting their employees and decide to extend remote working privileges to cut office lease costs.
Many startups thrive well in expensive cities such as San Francisco, Berlin and Seattle with limited funding by adopting mixed working models. The funds these companies save by keeping fixed costs low are reinvested in staff welfare, which allows them to attract better talent (basically, self-starters who can be trusted to work without their bosses keeping an eye on them).

The wife and I have been approved for a FHB new build mortgage. We see there are quite a few that are almost done and available for sale.
What's the advice on this? Do we wait a few months and see what happens?

Take your time and lowball offers. Some commentators saying 20% off, could be more depending on the specific property. Someone's got to drive the sales prices down. Lowball and be patient as vendors might take a little bit of time to come to terms with lower prices.